Investors have been betting that the Trump administration would loosen regulations around for-profits colleges for months. But less than a week after Secretary of Education Betsy DeVos finally announced her plans in late June, attorneys general from eighteen states and the District of Columbia sued her.The lawsuit, filed Thursday, claims DeVos and the Department of Education illegally suspended increased Obama-era regulations that would have helped students swindled by predatory for-profit colleges. DeVos instructed her department not to enforce the new rules and said that she would appoint a committee to revise them.The two controversial regulations, called borrower defense to repayment and gainful employment, are designed to prevent and address fraud in higher education. While DeVos’ plans won’t erase the regulations, originally passed in the ‘90s, they halted stricter versions due to come into effect on July 1.Under borrower defense repayment, students can have their federal student loans forgiven if schools used deceptive or illegal means to encourage students to take out loans to attend, while the gainful employment rule puts consequences on the table, including expulsion from the federal student aid program, for for-profit schools that don’t provide students with an education that would allow them to pay off the debt they incur. Of the 500 programs that had been found to leave students with high debt and little income, about 300 have already shut down.“Since day one, Secretary DeVos has sided with for-profit school executives against students and families drowning in unaffordable student loans,” Massachusetts Attorney General Maura Healey, who’s leading the coalition of states challenging the Department of Education, said in a statement Thursday.The Obama administration’s push for increased scrutiny of for-profit colleges came in the wake of the collapse of two of the largest for-profit college chains in the country, Corinthian College and ITT Technical Institute, which left students with billions of dollars of debt, collectively, and no degrees.The attorneys general, all Democrats, are seeking to have the two rules instated as written under Obama’s Department of Education. Two student borrowers also sued the Department of Education Thursday over reconsideration of the same rules.“Fraud, especially fraud committed by a school, is simply unacceptable,” DeVos said in the statement announcing that the Department of Education would review and revise the rules. “Unfortunately, last year’s rulemaking effort missed an opportunity to get it right. The result is a muddled process that’s unfair to students and schools, and puts taxpayers on the hook for significant costs.”“It’s time for a regulatory reset,” she added. And it’s a reset that Congressional Republicans have been pining for. In their minds, a government trying to regulate a private industry and forgive student debt is a government that’s overreaching.In that same statement, DeVos cited a lawsuit brought by a coalition of for-profit colleges from California as the Department of Education’s rationale for revising the rules. But the state attorneys general note in their complaint that parts of rules uncontested by the for-profits’ suit are now open for renegotiation and called the reasoning an excuse for “wholesale reevaluation.”Ninety–eight percent of the schools that the two regulations affect are for-profit schools. Among the two percent of private college programs affected by the rules was a Harvard University theater program that shut down in January after the Department of Education gave it a “failing” grade based on the gainful employment rule.
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